When deciding between a Note & Trust Deed or a Contract, it's important to remember that by law we are not able to write contracts and may only prepare a Note & Trust Deed when we have an open escrow with our company. However, if the terms of the agreement are to be detailed (i.e. the loan will be "wrapping" one or more current loans), it is always best to have an attorney prepare a contract that protects both seller and buyer.
It is not unusual to collect reserve funds with a monthly payment ot pay property taxes and homeowner's insurance when they come due. This service does have an additional fee, however it gives the seller the peace of mind knowing these items are taken care of and saves the buyer from coming up with the full amount when these items come due.
When deciding a payment amount, some customers choose a figure that works with their budget. However, most amortize out the total amount owed over the number of years allowed for repayment, or in some cases, amortize it out on a 15 or 30-year schedule with a balloon payment.
Sellers and buyers must choose if they would like a monthly, quarterly, or yearly payment schedule.
DUE IN FULL DATE
A "due in full date" is the date that the entire remaining balance of the loan will become due. This may be in the form of a balloon payment or be the final payment in a loand that was fully amortized.
FIRST PAYMENT DUE DATE
The first payment can be due at closing, 30 days from closing, or on the first payment due date of the agreement.
The interest rate is completely individual to every account. Most sellers charge a slightly higher rate than what banks are currently charging. Customers will find that a real estate agent or attorney will be helpful when making this decision.
Fees normally include, but are not limited to, monthly fees and account set-up fees. Customers typically split fees 50/50, though many customers decide one party or the other will be responsible.
INTEREST START DAY
Typically interest starts the day of closing; however, this date is normally at the discretion of the seller and interest can start at anytime.
Most sellers decide on a grace period from the payment due date, after which point a payment will be considered late. At that point, the seller may choose a dollar amount or percentage of payment due to charge the buyer as a consequence of the late payment.